Cyprus to privatise stock exchange in 2022

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The government is considering tax incentives to encourage companies to enter the Cyprus Stock Exchange, as the Nicosia bourse hopes to privatise by the end of 2022, said Finance Minister Constantinos Petrides.

On Wednesday, Petrides met a delegation of the CSE headed by its chair, Marinos Christodoulides, who said a consultive firm would be selected in two weeks to advise on the privatisation process.

The CSE will also launch a new market for small and medium-sized enterprises (SMEs).

“We are in close contact and close collaboration; we have discussed the CSE’s strategic development plan, which includes a privatisation effort and a strategic investor by the end of 2022,” Petrides said.

Finding a strategic investor, he added, will: “Be decisive in developing the stock market as an alternative and an additional form of finance for the economy and businesses alike.”

The Minister and CSE chair called on companies to consider joining the stock market as an alternative source of financing in the backdrop of the pandemic.

They said today’s CSE in terms of regulation and supervision could not be compared with the 1999 stock market crash.

“The tool is there, liquidity is there we are working with the CSE Board so businesses could use the stock market as an alternative source of financing, and we are working towards that direction both through incentives and finding a strategic investor,” Petrides said.

He said the Ministry would examine tax incentives for companies who opt to join the CSE without further elaborating.

He also welcomed the CSE’s intention to launch a new market for SME’s.

Christodoulides stressed there is no lack of liquidity in the market “but rather a lack of listed companies for interested investors to invest in.”

“This is why we’ve requested from the minister to consider providing some incentives to companies, sound companies, to join the stock exchange so that the Cypriot market could operate correctly.”

On the new market for SMEs, Chrisodoulides said regulatory requirements would be less demanding compared with other CSE-regulated markets to allow growth.

The CSE’s request to establish a SMEs market is currently under examination by the Cyprus Securities and Exchange Commission (CySEC).

The CSE has been underperforming since the 2013 financial crisis; daily trading volumes are also negatively affected by COVID-19, while many listed companies have exited the main market due to increased regulatory requirements.